Center for Responsible Lending — a non-profit organization that strives to eliminate abusive lending and protect economic opportunity for all — recently conducted a study in California to determine the “who, the what and the where of foreclosures in the Golden State.”
The “first-of-its-kind” report, which was dubbed “Dreams Deferred: Impact and Characteristics of the California Foreclosure Crisis,” analyzed more than a half-million statewide foreclosure cases.
The results?
Latinos account for nearly half (48 percent) of defaults in the state. Whites were a close second (35 percent), while African Americans (8 percent) and Asians (6 percent) made up a relatively small portion of the foreclosure melting pot.
Additionally, “modest” homes — not “McMansions” or other oversized/overpriced properties — were the overwhelming primary victims of foreclosure, totaling a whopping 75 percent of the 500,000 homes in the study.
The reasons?
San Francisco Chronicle explains:
“Latino and African American borrowers were more likely to acquire higher-cost subprime mortgages with loan terms that generally increased the risk of default, compared with safer loans made to similarly situated non-Hispanic white borrowers…. According to the US Census Bureau, between 2000 and 2007, Hispanic homeownership grew 47%. Over that same period, homeownership nationally grew by only 8%. And, according to the Federal Financial Institutions Examination Council, in 2005 alone, mortgages to Hispanics jumped by 29%, with expensive nonprime mortgages soaring 169%.”
To correct the disproportionate problem, Center for Responsible Lending recommends that judges be allowed to “cram down” loan balances in default and increase funding for organizations that provide legal assistance and housing counseling.
Recent Comments